Real estate market hit hard by mass departure of expats

DAMMAM — The exodus of expatriate workers from Saudi Arabia has negatively affected the country’s real estate sector with a considerable fall in rent prices.

Many property owners were forced to reduce their rents to attract clients and ensure liquidity. Market analysts expect further falls in prices in the coming months.

According to the General Authority of Statistics (GaStat), 234,200 expatriate workers have left the Kingdom in the first quarter of this year. This is in addition to 466,000 foreigners who left the country in 2017, which brings the total number of expatriates who left the Kingdom over the past 15 months to 700,200.

Khaled Barasheed, former chairman of the real estate committee at Asharqia Chamber, said the fall in real estate prices in remote areas reached 25 percent while in cities the percentage was a little less. The demand for real estate properties has decreased compared to previous years.

“People have postponed their plans to purchase houses and other properties expecting the prices to fall further,” said Barasheed while speaking to Makkah Arabic daily.

Ali Al-Jibali, former vice chairman of the real estate committee at Asharqia Chamber, said the depression in the property market was not limited to the Eastern Province alone but covered all regions of the country. He attributed the fall to a global economic downturn.

He called for greater partnership between the Housing Ministry and real estate developers to boost the market by constructing more houses to meet people’s requirements.

Developer Mohammed Al-Yazidi said about 1.5 million Saudis were waiting for new housing products, adding that it would require greater partnership between developers and contractors.

Abdullah Al-Damigh, an investor in the sector, said property rents declined as a result of the departure of a large number of expatriate families from the Kingdom especially after the imposition of the dependent levy and companies cutting down the number of foreign workers due to increased costs of hiring and tough conditions set by the Labor Ministry.

“Many residential buildings remain vacant following the exodus of expatriate families. This is a good opportunity for Saudis to purchase flats at cheap prices,” he explained.

Remittances fall

Remittances by expatriate workers in Saudi Arabia registered a slight drop in the first five months of this year. Foreign workers made remittances worth SR60.46 billion from the beginning of the year until May 31 this year, which is a drop of 0.2 percent compared to the same period last year.

According to a report carried by Al-Eqtisadiah business daily, which quoted data released by the Saudi Arabian Monetary Authority (SAMA), foreign remittances of expats hit SR12.75 billion in May 2018, which is an increase of 8.8 percent compared to April 2018 when the total remittances amounted to SR11.72 billion.

At the same time, remittances in May registered a 2.2 percent fall compared to the same month last year, SAMA said. In May 2017, the amount of remittances was SR13.04 billion.

Meanwhile, foreign remittances by Saudis since the beginning of 2018 until the end of May stood at SR29.57 billion against SR24.55 billion during the same period last year, which is an increase of 20.5 percent or SR5.03 billion.

In May 2018, total remittances by Saudis hit SR5.93 billion against SR4.94 billion in April 2018, which is a 20 percent increase. The remittances in May 2018 were 16.7 percent (SR1.19 billion) less than the same month in 2017.

Total foreign remittances of Saudis and non-Saudis from January to May registered a 5.8 percent jump compared to the same period last year. The total remittances until the end of May reached SR90.03 billion while it was SR85.13 billion during the same period last year.

The total foreign remittances in May 2018 amounted to SR18.68 billion compared to SR20.16 billion during the same period last year.

Foreign remittances accounted for a significant portion of foreign exchange transactions by commercial banks in the month of May. The total value of the transactions during the month dropped by 13 percent to SR415.57 billion from SR447.66 billion in May 2017.